Ref:AltaVista IPO & CPQ - Hello Ratan and Satish---->Bit more info.
Well here is a bit more information about the Alta Vista spin off.
==================================
Compaq to Sell Stake in AltaVista Site to Public (Update6)
(Updates with details on listing on NASD in 6th paragraph.)
Houston, Jan. 26 (Bloomberg) -- Compaq Computer Corp., the
world's second-largest computer maker, plans to sell shares in
its AltaVista World Wide Web search engine to the public to
profit from the Internet boom.
Compaq, which acquired AltaVista in its $9 billion purchase
of Digital Equipment Corp. in June, said it hasn't determined the
size of the stake or the exact timing of the sale. Chief
Executive Eckhard Pfeiffer said the sale could come this year.
Compaq wants to wring more value from AltaVista, a Web site
where computer users search the Internet by asking simple
questions. Internet IPOs have been among the most successful,
with shares of companies like Marketwatch.com Inc. rising
fivefold in the first day of trading.
''They are trying to get some of the halo effect of these
dot-com stocks,'' said analyst Ashok Kumar of Piper Jaffray Inc.
Compaq gained 2 3/8 to 49 1/16 in trading of 23.7 million,
making it the fifth-most active U.S. stock. The 41 Internet-
related IPOs in 1998 had an average increase of 154 percent at
the end of the year, according to CommScan LLC, a New York-based
investment banking research firm.
AltaVista would likely be valued at $1.5 billion to $2
billion, analysts said. Compaq would likely sell only a small
stake in the initial public offering. The company said it will
likely list shares on the NASD Exchange, where many tech
companies are listed. It also may list shares internationally.
''Compaq wants to keep a good portion of it -- they don't
want to lose control,'' said analyst Dan Niles of BancBoston
Robertson Stephens, who rates Compaq ''strong buy.''
Search Engine
AltaVista is known for its superior search capability that
lets a PC user ask a question such as ''What is the weather in
Boise?'' and get a list of online links to the information. Users
can search photos or video clips of images like Bruce Springsteen
or mothers and daughters.
AltaVista will be separated from Compaq and become a wholly
owned subsidiary based in Palo Alto, California. The company will
be headed by Rod Schrock, currently senior vice president of
consumer products at Houston-based Compaq.
Analysts expect that AltaVista will compete better as an
independent entity by making decisions quicker and establishing
partnerships that Compaq may have had difficulty with.
''The perceived independence is important because they can
have an arm's-length relationship with more providers and there
won't be much potential for conflict of interest,'' Kumar said.
Compaq, also the world's biggest PC company, already has
begun souping up AltaVista by buying online shopping service
Shopping.com and enhancing the way users can search for text as
well as photos.
Today, Compaq and Microsoft Corp. agreed to make AltaVista
the default search engine on Microsoft's MSN Web site. AltaVista
will offer Microsoft's HotMail on its site, the first time
Microsoft has licensed that technology.
Compaq aims to benefit from Internet sales, which are
forecast to double to $68 billion this year, compared with
personal computer sales growth of about 6 percent.
The goal is to create a site that brings together a spider
web of searching capability with an array of shopping options, so
a user searching for information about skiing can link to sites
that sell skis, jackets and other gear. AltaVista also will keep
some existing relationships with e-commerce companies like
Amazon.com Inc., the top online bookseller.
''They've got this great brand in AltaVista -- anything they
do with it is better than what's been done to date,'' said
analyst Jim Balderston of Zona Research.
IPO Plans
Digital Equipment filed for an IPO for AltaVista Internet
Software Inc. in August 1996, before Compaq bought Digital.
Digital withdrew the registration in October 1997, deciding
instead to bring AltaVista into its product groups and use its
search capabilities to show off its computers.
AltaVista was created by a group of researchers in 1995 who
developed a way to search archives of internal e-mail to settle
fierce technical debates. That tool, coupled with some new Alpha
computers Digital had introduced, made up the framework to create
a searchable index of the Internet.
Today, Compaq wants to capitalize on the rich valuations of
Web-related companies that have sold shares in recent weeks.
''As part of Compaq, AltaVista contributes nothing to its
market value,'' said John Robb, Internet analyst and founder of
Gomez Advisors Inc., a Concord Massachusetts-based research
company.
As a separate entity, though, AltaVista is a pure Internet
company with the potential for big gains from an IPO. Online
auctioneer UBid Inc., for instance, more than tripled in its
first day of trading Dec. 4 and now commands a market value of
about $630 million.
Big Plans
AltaVista had annual sales last year of about $50 million
and has about 150 employees, excluding those that will come on
board after completion of the acquisition of Shopping.com.
Schrock said he expects AltaVista to be one of the top three
revenue generators on the Internet by the end of 2002.
''Take Yahoo! and Amazon.com and put them together and that
is what we want to be,'' Schrock said. ''We will achieve the
revenue scale of Amazon, but have a 10 percent gross margin
advantage.''
Yahoo! Inc., the No. 1 Web directory, rose 39 3/8 to 351
3/8. Other Internet stocks gained amid enthusiasm for the
AltaVista IPO.
Amazon.com has annual sales of about $600 million and a 22.7
percent gross margin, the percentage of sales left after
subtracting production costs.
Most of AltaVista's sales come from advertising, though e-
commerce is now contributing as well. AltaVista's sales rose 63
percent from the third quarter to the fourth quarter of 1998,
Compaq said.
The alliance with MSN, the fourth-largest Internet site,
gives AltaVista much broader reach. Microsoft will offer a co-
branded version of HotMail and new features like instant
messaging will be included on AltaVista's site.
|
